Underdog conservative channel Newsmax is challenging Rupert Murdoch’s dominant Fox News in court.
Newsmax sued Fox News parent firm Fox Corp. Wednesday, accusing Murdoch’s television company of anti-competitive behavior designed to squeeze rivals to maintain its “unlawful monopolization of the Right-leaning Pay TV News Market.”
Fox has “engaged in an exclusionary scheme to increase and maintain its dominance in the market … resulting in suppression of competition in that market that harms consumers, competition and Newsmax Broadcasting,” the Boca Raton, Fla., firm said in its federal lawsuit filed in Miami.
Politically conservative news is big business, and Murdoch has mined that lucrative niche since launching Fox News in 1996 with network architect Roger Ailes. Newsmax launched as an alternative nearly two decades later, in 2014. By that time, Fox News was well established as the go-to outlet for Republicans and other political conservatives.
In its 31-page complaint, Newsmax accused Fox of using its market clout to discourage pay-TV distributors from carrying or promoting Newsmax and other rival conservative news outlets. Fox allegedly imposed “financial penalties on distributors if they carry Newsmax” in basic cable packages, and other obstacles, including charging higher fees or requiring carriage of “little-watched channels like Fox Business,” according to the lawsuit.
“But for Fox’s anticompetitive behavior, Newsmax would have achieved greater pay TV distribution, seen its audience and ratings grow sooner, gained earlier ‘critical mass’ for major advertisers and become, overall, a more valuable media property,” Newsmax said in its lawsuit.
Newsmax became a publicly traded company earlier this year. It raised $75 million through its initial public offering, but its stock, which entered the market at about $83 a share, closed Wednesday down nearly 1% to $13.86.
Fox News scoffed at the lawsuit.
“Newsmax cannot sue their way out of their own competitive failures in the marketplace to chase headlines simply because they can’t attract viewers,” the network said in a statement.
Newsmax, in its complaint, argued that Fox throws its weight around when striking deals with digital media platforms, including Hulu + Live TV, DirecTV+, Sling TV and YouTube TV, which now make up about 30% of the pay-TV market. As a result, some pay-TV providers have little incentive to carry or promote Newsmax, the lawsuit alleges.
Fox’s commanding position has allowed the company to extract “supra-competitive carriage fees,” according to Newsmax. Fox charges pay-TV distributors nearly $2.20 per subscriber per month to carry Fox News. That’s double CNN’s fees and about six times MSNBC’s carriage fee, Newsmax said.
“These inflated costs have been or likely will be passed on to consumers,” Newsmax said in a statement.
Fox News consistently beats CNN and MSNBC in the Nielsen ratings. It was the No. 1 traditional TV network overall in July, beating ABC, NBC and CBS, according to Nielsen.
Newsmax also alleged Fox News resorts to intimidation campaigns, including pressuring guests not to appear on Newsmax. “It also hired private investigators targeting Newsmax executives to damage the company’s credibility,” according to a Newsmax statement.
Newsmax, in its lawsuit, contends the market is not the universe of cable news channels, including CNN and MSNBC. Instead, it contends the politically conservative news space is a market unto itself, controlled almost entirely by Fox.
“Right-leaning pay TV news has been a cornerstone of American television, drawing tens of millions of viewers who identify with, or prefer, right-leaning perspectives on politics, current events, and cultural debates,” the Newsmax lawsuit said.
“A large segment of consumers of political news and media seeks news, commentary, and analysis that aligns with or speaks to their political viewpoints,” the lawsuit said. “These right-leaning viewers treat other right-leaning news channels as their next best substitute — and do not consider left-leaning news outlets as adequate substitutes for right-leaning news channels.”
Newsmax is seeking a jury trial and unspecified financial damages. It also wants a judge to declare Fox’s conduct unlawful under the Sherman Act and Florida’s anti-competition laws and prevent Fox from striking exclusionary contracts.
“This lawsuit is about restoring fairness to the market and ensuring that Americans have real choice in the news they watch,” Newsmax Chief Executive Christopher Ruddy said in a statement.